EXCLUSIVE: “Mutual benefits” – Haytham Kaddoura, SmartStream in “The Fintech Magazine”

Financial institutions face largely the same challenges: talent, time, costs and increasingly pressure not to contribute to environmental damage. Haytham Kaddoura, CEO of SmartStream, claims there are four good reasons to let it share the load

ISO 20022 has become a preoccupation with the majority of players in the financial world, such is the transformative nature of the payment messaging standard that will soon come into play for many of them for the first time. The protocol has already replaced existing domestic legacy payment standards in more than 70 countries and, says Britain’s NatWest bank, within five years we can expect to see around 80 percent of high-value payments by volume, and 90 percent by value, using ISO 20022 .

The benefits of adoption are obvious: a new global standard for payment messages between financial institutions, enabling faster processing and improved reconciliation. Richer and better data, increased transparency and automating the digitization of payments should help counter the evil of failed payments that currently costs the global economy $118.5 billion in taxes, labor and lost business a year, according to Accuity data.

So, regardless, ISO 20022 represents a positive move in the payments space, connecting the financial world with less friction and much more efficiency. But with all these growing and increasingly complex volumes of data – 10 times more data per ISO 20022 notification, according to EY – there is a downside: the processing capacity needed to handle not only the nominal increase in information, but the associated regulatory reporting, including ESG (environmental, social and governance) reporting, not to mention the environmental impact of all the extra processing.

“Regulation has been a wake-up call for banks,” says Haytham Kaddoura, CEO of global financial software and managed services provider SmartStream. “They would be fooling themselves if they didn’t expect it, because everyone has seen the trend towards greater transparency.

“But the financial ecosystem is coming together – regulators, individuals, customers – to really help address some of the gaps that were in the financial sector, and still persist in certain areas. We have a long way to go to meet all the challenges, but we continue to work very closely with some of the best institutions in the world, helping them address these challenges, building transparency, building the checkpoints in their business, to make sure they’re as compliant as possible.” To handle the vast amounts of information now at play, financial institutions need technology – mainly cloud-based solutions.

Among them, SmartStream AIR is capable of processing millions, or even billions, of data lines per second. This artificial intelligence (AI) reconciliation and exception management system learns from user behavior, automatically populates fields, sets labels, runs out of business hours. It can provide suggestions to users, or fully automate the process, significantly improving straight-through processing (STP) rates.

SmartStream AIR requires no training or configuration and is easy to onboard. Users simply upload raw data to the application, in any structured format. The application then matches the information using unsupervised AI. AIR is just one of the cost-effective solutions emerging from SmartStream’s innovation strategy to help data-rich, time-poor banks meet everyday challenges. In Kaddoura’s view, banks save significantly when they collaborate with a fintech like this, compared to developing or building on a product themselves.

“Banks and institutions spend millions of dollars, only to realize, one or two years later, that they should have done it through someone who actually does it for a living.”

“I think institutions should have a neutral, fundamental look at what they need to do internally, from a technology perspective,” he says. “The infrastructure costs for an institution today to do everything themselves is going to be phenomenal, and I don’t think it makes any business sense with the current economic challenges we’re facing globally. I mean, it defeats the purpose. Banks and other institutions use millions of dollars, only to realize, a year or two later, that they should have done it through someone who actually does it for a living. There are many small and large companies like ourselves, who are deeply skilled at what we do . We are the experts.”

The logic of using SmartStream AIR specifically is that it can be deployed within hours – not through the IT department, but by taking users directly to the Cloud-native platform, which won an award this year for its intuitive user interface (UI). The prestigious Red Dot Design Award was the first to be given for a financial reconciliation solution, beating 20,000 entries worldwide. Previous winners include the likes of Apple, IBM, Samsung, ING and BMW.

In November, SmartStream also won a Fintech Finance ‘Wow Moment’ Award for Data Insights. By combining human and artificial intelligence, organizations can better manage their workforce, says Kaddoura.

“People are increasingly oriented towards working from home, skills can leave an overstaffed organization and there is a very real need to free up the people you have to do higher value tasks. A more innovative approach is needed. ” Such a cloud-based service comes with efficiency built-in. You no longer need a warehouse full of people to handle the huge volumes of information generated by data-rich payments that need to be screened and reconciled; delivery is streamlined, more accurate, cheaper and, importantly, achieved with less impact on the environment, according to Kaddoura.

“Environmental efficiency in the industry is no longer a question of ‘if’. I think we are all heading in that direction, he says. “Multi-tenant centers, moving to the cloud, all contribute to preserving and reducing the impact we leave on the environment. “By unifying our customers’ demands, we are already moving towards greater and more efficient processing, and some of the new processes and changes in physical technology infrastructure will, I believe, help us reduce our own footprint even more, and help our customers see the value, from an environmental impact perspective.”

AIR is a testament to the work done by SmartStream’s Innovation Lab, which is based in Vienna and staffed by a cadre of research and data scientists, and technologists, who work with clients to delve into their evolving priorities, and then apply AI to solve them.

“With advances in digital payments, the volume is only exploding globally. Institutions in unconventional markets require the ability to handle 100 million transactions a day, says Kaddoura. “Our innovation team is looking at improving our value proposition for clients, building that efficiency, the ability to handle a ton of transactions. The focus going forward will be on reducing the cost of infrastructure for these institutions: the ability to upgrade, move quickly, reduce the cost of ownership for our customers; help them with their regulatory compliance as much as possible.”

The SmartStream approach, he says, is a pragmatic response to a long-standing problem; a way to reduce costs through reciprocity, albeit through an external supplier.

“Many of the customers we see seem to have a similar problem, but the basic idea of ​​working together to solve it doesn’t seem feasible,” says Kaddoura. “That’s why it has to come through a third party like us. We look at our research offer in the reference data room and offer it to those who need it.” It must be good for the company – and the environment.

This article was published in The Fintech Magazine issue 26, pages 8-9